The Danish Jyske Bank has introduced something that no other bank has offered. A client can earn 0.5% annually on a loan he/she took out in a bank. The loan with a negative interest rate even outperformed the offer of Nordea bank, which began to offer 0% mortgages.
According to The Guardian , a negative interest rate mortgage proposed by the Danish bank Jyske Bank means that the bank actually pays borrowers in exchange for having borrowed from it. Effect? The client will pay less than he borrowed from the bank .
Jyske Bank explains that the idea is non-cash. Profit occurs through savings and a real reduction in installments. Customers do not get money from the institution. They can repay their credit as in any other case, but their installment is reduced every month.
We don’t give money to our customers, but our clients’ debt decreases every month and they pay less
It is worth adding, however – that at the very end – the bank’s clients will probably give a little more money than they borrowed. Credit installments should also include a fee for drawing up the contract as well as for loan servicing.
Negative interest rates
The whole idea was described by the bank on the website. There are plenty of inquiries from clients… Some of them are still wary. As The Guardian explains, thanks to interest rates not found on other markets, this type of loan is possible in Denmark as well as in Sweden and Switzerland.
The idea of Jyske Bank seems to be a response to the potential threats arising from such interest rate levels. The savings accumulated by customers on bank accounts can start to shrink quickly. A loan with a constantly decreasing installment, as a result of which we give less than we take, allows you to take advantage of this special situation on the financial market.
0% mortgage at Nordea Bank
Jyske Bank offers a 10-year mortgage, at which the client will be charged 0.5 percent. This means the client will pay less than the loan they’ve taken. Similarly, another Danish bank, Nordea, recently announced another – also unheard-of product on our market – a 20-year mortgage with a fixed, zero interest rate. Financial analysts estimate that such cheap borrowing of money can cause a rise in housing prices.